Consumers: Economic Prospects Bleak

Consumer confidence took another hit in July as their concerns deepened about personal finances and jobs, according to the latest surveys from The Conference Board and the Thomson Reuters/University of Michigan Survey of Consumers.

The Conference Board Index of Consumer Confidence slipped sharply for the second consecutive month, dropping nearly four points in July, from 54.3 in June to 50.4.

Consumer expectations weakened, as did consumer evaluations of the present situation. More respondents expect their incomes to be less in six months (17.5% in July vs. 16.8% in June) and fewer expect their incomes to rise in that period. More consumers said jobs are hard to get (45.8% in July vs. 43.4% in June.

Buying expectations rose last month, but from very low levels. Slightly more consumers expect to buy a car in the next six months (4.5% vs. 4.1%) and more plan to buy a major appliance in the period (28.5% vs. 23.7% in June).

The Reuters/University of Michigan consumer survey hit 67.8 in July, down from 7.6 in June, but nearly three points higher than in July 2009. Both the index of consumer expectations and the current conditions index dropped in July. Expectations remain lower than a year ago1.4%, but the consumers' evaluation of current conditions was 8.5% higher than July 2009.

"Income and job prospects were extraordinarily weak and those bleak prospects have made consumers more cautious spenders,” the Survey states.
"Overall, the data suggest that the current slowdown in spending is likely to persist well into 2011 as it reflects a widespread and general realignment of job and wage expectations. While a double dip is still unlikely, it now has a non-ignorable 25% probability, the Survey adds.